When a Firm Subtracts Its Cost of Sales from Its

question 14

Multiple Choice

When a firm subtracts its cost of sales from its net sales, the amount left over is called:

• A) gross margin.
• B) return on assets.
• C) net profit.
• D) expenses.
• E) gross sales.

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Definitions:

Hedge Ratio

The Hedge Ratio is a risk management tool that compares the value of a position protected through a hedge to the size of the entire position.

Long Put Option

A financial derivative strategy that gives the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a predetermined price within a specified timeframe.

Binomial Option Model

A mathematical model used to price options by breaking down the time to expiration into potentially infinite segments or steps.

Subintervals

Divisions within a larger interval, often used in mathematics to partition an interval into smaller segments.